Forex trading is a category of spread betting which involves taking a bet on the currency pair price movement, in order to make profits. Speculation on the right direction of the price movement results in profit and monetary gain. In order to involve in forex trading, you do not need to own any currency.
Forex trading is not difficult and anyone can do it, but, it certainly needs research and a proper plan. The beginners often start without a proper plan and don’t indulge in proper research, and due to this they sometimes lose a lot of money while getting discouraged from betting further. So, here are some vital and valuable insights that can help you become a successful forex trader.
Difference Between The Ask and Bid Price
A spread betting platform that lets you indulge in currency spread betting usually works on the basis of two prices – the bid price and the ask price. The range between these two prices is called as the “spread”. The traders are required to place the bets on whether the price of the currency pair will go higher than the ask price or lower than the bid price. The narrower the spread is, the more attractive the currency pair will be.
Indulge In Profound Research Before Finding A Reputed Broker
There are innumerable forex brokers and one can see a lot of promotional mails or advertisements while browsing the internet. Most of these brokers are not reliable, and they often attract the amateur or new traders by presenting lucrative offers, some of which are too good to believe. Owing to the concerns related to the safety of deposits and the integrity of the forex broker, it’s important that the new traders only open an account with a firm which is registered, legal and reliable.
Traders must also research every forex platform’s account offerings, including the initial deposits, leverage amounts, commissions and spreads, account funding as well as the withdrawal policies.
If you are planning to start Forex trading, then you must first lookout for a trusted and reliable trading platform. One of the best UK based spread betting platforms is ETX Capital, that lets indulge in forex trading, indices trading as well as commodity trading.
Use A Practice Account
Nearly all the good trading platforms offer the users a “demo account” or a practice simulated account, which allows placing hypothetical trades without risking the real money. This account can be used for a few days to develop your own trading strategies and plan, and to test their effectiveness. You can also learn and practice the different order entry techniques to become adept in trading.
Protecting Your Trading Account
While all the traders who start forex trading focus on earning money and increasing their initial investment, but, as per the trading experts, your emphasis should be on “not losing the money” instead of making money. Once you master the art of not losing money and protecting your money, you will gradually be able to earn a lot of it in the long run.
Using the “Protective Stop Loss” is one of the effective ways to ensure that your losses remain reasonable. The traders also plan to use a maximum daily loss amount limit beyond which all the positions will be closed and traders would not be able to issue any new trades until the next trading session.
Protecting the profits is also very important and certain money management techniques like “trailing stops” can help in preserving the winnings while still getting a trade room for growth.
All these techniques can greatly help you to become a successful forex trader without risking a lot of your money.